Country report: Portugal – Portuguese pet food producers tap into potential

A shift in pet owners’ focus to quality and health is driving growth in the Portuguese pet food manufacturing sector. However, the local industry is not without its challenges.

As pets have become cherished members of Portuguese households, their numbers are soaring. According to the Portuguese Pet Information System (SIAC), the country has 4.19 million registered pets to date, including over 3 million dogs.

A nation of pet lovers

These figures are echoed by the TGM Global Pet Care Survey 2023 – a study that involved 40 countries and over 15,000 consumers. It found that a remarkable 72% of households in Portugal own at least 1 pet, which far surpasses the global average of 58%. Dogs hold a prominent place, accounting for 61% of the total. Cats follow, with 54% of Portuguese households owning a feline companion.

Manufacturing on the rise

Although relatively small, the country’s pet food manufacturing sector has shown consistent growth. From 2018 to 2022, the total number of companies involved in this industry nearly doubled, from 8 to 17.

Statistics Portugal concludes that the local pet food industry hit €133.3 million ($145.3M) in revenue in 2022, up from €40.7 million ($44.3M) in 2019. Some of the key local producers include Sorgal Pet Food (part of the agro-food group Soja de Portugal), Avenal Petfood and Ovargado.

Sales market dynamics

The sales market is also showing positive signs after a 1.9% decrease in performance in 2021-2022. According to Euromonitor International, Portuguese pet parents spent an estimated €612.2 million ($667.2M) on looking after their animals in 2023, an increase of €1.8 million ($2M) against 2021. Most of the expenditure goes to food (76%), followed by pet care and other supplies (23.5%).

Euromonitor International concludes that the local pet care market grew by 2.2% between 2022 and 2023, mainly triggered by record growth in pet food (+2.5%) since the pandemic. However, this growth came at the expense of pet products, which grew by only 1.2% compared to the 2.6% recorded in 2020-2021.

Jorge Amorim Moura, CEO of Ornimundo, a chain of specialty animal stores, estimates that the retail market is growing at an average rate of 4% to 6% per year. The market’s focus is mainly on dogs and cats, which account for over 80% of sales.

Supermarkets remain by far the most prominent channel by sales volume (65.6%), followed by specialist pet stores (21%) and online (17.2%). According to the Portuguese Association of Traders of Products for Companion Animals, there are approximately 3,000 establishments selling pet products.

Most of them are small and medium-sized enterprises (SMEs) and family-owned. Together, they generate a yearly turnover of €250 million ($272.5M) and they employ around 10,000 people.

As for the services available, veterinary services are most popular (79%), followed by grooming services (5%), and pet training and behaviorists (2%).

Pet food: quality before price

In an era where financial considerations carry increasing weight, it is natural that expenses related to pet ownership can put significant pressure on consumers’ wallets. Nevertheless, according to the TGM Global Pet Care Survey 2023, pet food buyers continue to prioritize quality as their main concern, followed by price.

When choosing food for their pets, some consumers prioritize products that meet specific needs or health considerations. This is particularly noticeable among the 55 to 64 age group, with 64% of respondents showing a strong inclination towards such pet food. In line with the humanization trend, pet parents are increasingly interested in buying natural foods for their furry friends, and various Portuguese companies are tapping into this potential. One example is Purrmi, which has created 100% natural cat food without additives or preservatives and delivers within 24 hours.

“In the beginning, we started with Biologically Appropriate Raw Food (BARF) recipes. But since cats are particularly picky with food, we decided to semi-cook the ingredients slowly to not lose essential nutrients and at the same time increase the palatability of our recipes,” explains CEO João Campaniço.

Portuguese pet care

Sector challenges

Despite these positive developments, the sector is facing a number of challenges. One is the high level of value-added tax (VAT) that currently applies to pet food products. The Portuguese Association of Manufacturers of Compound Feeds for Animals (IACA) advocates for this rate to be reduced.

The association’s Secretary General Jaime Piçarra considers this measure essential to fight against the abandonment of dogs and cats. “There is a need to reduce the VAT on pet foods, currently at 23%, to 13%. And we are not even asking for 10%, which is the level in Spain,” he states.

Another concern for IACA is the ecological footprint of pets. Manufacturers are taking several steps to minimize this, including using local raw materials and those otherwise considered waste. Piçarra also mentions that IACA is studying alternative proteins – including algae and insects – as a strategy “to contribute to making pet foods increasingly sustainable with the least possible environmental impact”.

This is precisely one of the objectives of InsectERA, a project funded by the Recovery and Resilience Plan (PRR) with €60 million ($65.3M) for the next 3 years. It aims for Portugal to have a cluster in insect production and become a market leader in the field.

Teresa Mendes

PETS International Contributor